ACC202 Ch.4

What is the purpose of closing entries in accounting?

• To correct errors in previous transactions

• To transfer net income or loss and dividends to retained earnings

• To adjust for prepaid expenses and accrued revenues

• To prepare financial statements

Which of the following accounts is not closed at the end of an accounting period?

• Service Revenue

• Salaries Expense

• Dividends

• Equipment

The four closing entries are made in which order?

• Close revenues, close expenses, close dividends, close income summary

• Close dividends, close revenues, close expenses, close income summary

• Close revenues, close expenses, close income summary, close dividends

• Close expenses, close revenues, close dividends, close income summary

Which of the following accounts will appear in the post-closing trial balance?

• Service Revenue

• Salaries and Wages Expense

• Retained Earnings

• Income Summary

What does the post-closing trial balance primarily check?

• If all revenues and expenses are correctly recorded

• The mathematical accuracy of ledger accounts after closing entries

• The net income for the period

• If assets exceed liabilities

What is the correct sequence of steps in the accounting cycle?

• Journalize transactions → Post to ledger → Prepare financial statements → Prepare trial balance

• Journalize transactions → Post to ledger → Prepare a trial balance → Adjust accounts → Prepare financial statements

• Prepare a trial balance → Journalize transactions → Post to ledger → Adjust accounts → Prepare financial statements

• Journalize transactions → Prepare financial statements → Adjust accounts → Post to ledger

Which of the following is NOT part of the accounting cycle?

• Recording business transactions

• Preparing a bank reconciliation

• Posting to the ledger

• Preparing an adjusted trial balance

What type of accounting error occurs when a debit is mistakenly recorded as a credit?

• Transposition error

• Reversal error

• Omission error

• Posting error

Correcting entries are:

• Always required at the end of the period

• Necessary only when errors occur in the journal or ledger

• Made to adjust balances for depreciation and accruals

• Part of the closing entry process

If an expense was recorded as an asset, what type of correcting entry is needed?

• Debit an expense and credit another expense

• Debit an asset and credit an expense

• Debit an expense and credit an asset

• Debit an asset and credit a liability